By Stephen Smoot
Last month Gina Raimondo, United States Secretary of Commerce, announced that “if you don’t have access to quality, affordable high-speed Internet service now – you will, thanks to President Biden and his commitment to investing in America.”
Local governments trying to access that funding to expand broadband and promote economic development, as well as citizens counting on access to service, may need to look at the fine print.
State governments, as well as the District of Columbia and U. S. territories, will receive shares of the $42.5 billion Broadband, Equity, Access, and Deployment program, or BEAD.
“This is a watershed moment for millions of people across America who lack access to a high-speed Internet connection. Access to Internet service is necessary for work, education, healthcare, and more,” said Alan Davidson, Assistant Secretary of Commerce for Communication and Information.
Senator Joe Manchin also touted the program that will inject $1,210,800,969.85 into state broadband efforts, saying in a release that “today, not only are we announcing more than $1.2 billion to finally ensure every home in West Virginia is connected to reliable broadband. The maps now show what we knew all along – that West Virginia is one of the least-served states in the country.”
Senator Shelley Moore Capito also supported bringing BEAD funding to West Virginia.
Funding for BEAD comes through the Infrastructure Investment and Jobs Act. The National Telecommunications Information Administration, according to a Congressional Research Service release, intends that funds will be spent “‘to bridge the digital divide’ by facilitating ‘access to affordable, reliable, high-speed internet’ throughout the United States, particularly in ‘communities of color, lower-income areas, and rural areas.’”
In a recent public meeting, however, Laura Brown, executive director of the combined Pendleton and Grant County economic development authorities, dismissed the notion that this funding would connect everyone as “fluff,” due to the fact that the most challenged local governments may have the most difficult time obtaining the funds.
She shared that federal officials encouraged interested local governments in West Virginia to seek match funding from the State.
According to State Tech Magazine, depending on the area, fiber optic broadband expansion can cost between $25,000 and $50,000 per mile. In West Virginia in 2018, the generally accepted number was $30,000 per mile, but inflation has driven up that cost since then.
This has made broadband expansion an expensive proposition, as well as a nearly unprofitable one in remote rural areas. Additionally internet service can be provided at levels below what is needed for business or professional use, but economic development officials generally push for broadband service that can support a variety of business or residential needs..
According to a report by CTC Technology and Energy, BEAD applicants must provide a 25 percent match for BEAD grant funding. That match could come as either a cash or an in kind match.
Importantly, states are “required to incentivize matches of greater than 25 percent from subgrantees wherever feasible.” States are encouraged “to include extra points or weight to applicants that offer to provide more than 25 percent in match.” American Rescue Plan Act funds can be used for the match, but only if applicants adhere to strict guidelines.
States that do this could effectively create disadvantages for economically struggling jurisdictions that may lack the human capital to create an effective application, let alone pay a higher match.
Reason Magazine referred to BEAD as a “boondoggle,” citing statistics demonstrating that the private sector had rapidly expanded broadband access in recent years with 90 percent of Americans connected. Their critique, however, did not include discussion of the challenges of connecting rural Americans with service that providers struggle to provide, due to high costs and unprofitability.
The Taxpayer Protection Alliance attacked the program for imposing mandates and guidelines that will drive up the price of projects. In a release, Patrick Hedger, executive director, shared that since BEAD is also a “industrial and a social policy and a federal jobs program,” as well as a service expansion project, that it will likely fail to deliver on its promises.
Other provisions that applicants must follow “will greatly raise the costs of connecting unserved households.” The organization also questioned the allocation of $100 million to the District of Columbia, which already has 100 percent broadband service coverage.